The Pfizer Layoffs - An Analysis
The Pfizer Layoffs - An Analysis
By Dave Hinz - Publisher
1/24/07
Could It Be The Political Climate in Michigan and New York?
The announcement by Pfizer that the company intends to cut 10,000
jobs throughout the country, and 2,400 dearly needed jobs in Michigan
has prompted speculation as to motives. While several facilities
will be closed, others will be enlarged. This, we are told is
simply downsizing the workforce and increasing the efficiency
of those remaining facilities.
The question that comes to mind, however, is in the selection of which facilities
to close. The Research Center in Ann Arbor, Michigan stands to
lose 2,100 jobs, although as many as 1000 of those employees will
be offered jobs in other states.
Another major facility in New York is slated to be closed, again, with some
of those employees allowed to transfer to other sites, in other
states.
From the announced cuts, it would appear that the two states hurt the hardest
would be Michigan and New York, with Connecticut
the biggest winner as the Pfizer center in Groton is expanded.
One cannot help but wonder if politics do not factor in the company’s
decision.
Michigan has long been recognized for its hostile business tax climate.
The state has both a corporate income tax and a single business
tax. The good news, however, is that the voters chose to eliminate
that single business tax this year, a move expected to attract
business to the state.
But that is not the entire story. The recent election also returned Democrat
Jennifer Granholm to the office of Governor, despite a one-state
recession that has rocked the state. In addition, the Republican
controlled state house has been replaced with Democrat control.
Granholm has stated, and the Democrat leadership has agreed, that
the state of Michigan needs to raise taxes to make up for the
shortfall created by the repeal of the SBT.
What form that tax increase will take is unknown at this time. That uncertainty
might well have factored into Pfizer’s decision. Then, there
is the matter of US Senator Debbie Stabenow, recently returned
to office as well, who has been a vocal opponent of “Big
Pharmaceuticals.”
A similar situation is taking place in New York. The Republican governor
has been replaced with a known tax-and-spend Democrat. The New
York legislature is looking at ways to raise taxes, even now.
In addition, both New York Senators, Schumer and Clinton have
been vocal leaders in the congressional fight to attack the pharmaceutical
companies.
On the other hand, Joe Lieberman has long been known to be a friend to the
industry, an industry, I might add, that has been his greatest
political contributor.
It is possible that this is all nothing more than a coincidence. There is certainly
nothing wrong with a company rewarding those states that show
that company the greatest gratitude. The obligation of a corporation
is to make money for its stockholders. If the political or tax
climate in a state make that obligation impossible, that company
has every right to move to a state that does.
posted by HinzSight Team
at 10:39 PM
5 Comments:
The layoffs are about preserving profits for Wall Street, rather than producing new life saving drugs. Profit at any cost.
You know, a big part of the friendly-for-Pfizer climate in Conn. is the infamous Kelo eminent-domain taking. Pfizer's worldwide R&D HQ complex is right next to Kelo's property, and the city of New London was trying to do Pfizer a favor in taking it. So don't be too cheery about Conn's hospitality toward Pfizer.
MK, it is all about the profits including the taxes. Decisions like loyalty and available educated labor pool have little to do with it any more.
Thanks. You're correct. Stabenow's strategic blunder continues to be poorly covered. The Detroit News was the only paper who caught on to Stabenow's stupidity (1/22/07 "Attack on drug companies will send jobs out of state"; the morning before Pfizer's announcement). Debbie Stabenow is 100% responsible for Pfizer dumping Michigan. Why? Well, Pfizer's pipeline is fast dwindling with the loss of torcetrapib. Pfizer was also fighting a lawsuit that invalidates their Canadian Lipitor patent (they just lost that suit). Debbie never connected the dots (I don't think she reads too many financial papers). So January 10, 2007 she reintroduces The Pharmaceutical Market Access and Drug Safety Act. A law that would require medicaid and medicare to buy pharma from overseas distributors (read it; so much for US patent protection). So, Pfizer said, 'F**k this, see'ya Michigan. We're going to help the state's that might want to help us.' What's really infuriating to me is how Michigan's recession won't stabilize (only state in the US seven years running; we're #50 in growth). The hole has become so deep now, it's going to take a decade to get back to where we were just a few years ago. Problem is, our politicians don't know how to stop digging. Oh, and mudkitty, you're an idiot (you must work for the government).
Thank you HM, you hit it right on the head with your analysis. And don't mind DirtyCat. She is a regular lurker. She posts something every time the nurse leaves the office door open, when she steps away from the ward!
Post a Comment
Links to this post:
Create a Link
<< Home